Cost Reduction Strategies and Financial Resource Allocation in Toscanini Ltd.
Added on 2019-12-04
18 Pages4873 Words178 Views
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Management Accounting 1
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................4TASK 1............................................................................................................................................41.1 Preparing report and classifying different types of cost........................................................41.2 Using different costing methods ...........................................................................................51.3 Calculating cost using appropriate techniques.......................................................................61.4 Analysing cost data using appropriate techniques.................................................................6TASK 2............................................................................................................................................62.1 Preparing and analysing cost reports.....................................................................................62.2 Using performance indicators to identify potential improvement.........................................72.3 Suggesting improvements to reduce cost, enhance value and quality...................................7TASK 3............................................................................................................................................83.1 Purpose and nature of budgeting process..............................................................................83.2 Selecting appropriate budgeting methods for organization and its needs.............................93.3 Preparing budgets according to the chosen budgeting method..............................................93.4 Preparing cash budget............................................................................................................9TASK 4............................................................................................................................................94.1 Calculating variances, identifying possible causes and recommending corrective action....94.2 Preparing reconciled operating statement............................................................................104.3 Reporting findings to management in accordance with responsibility center.....................11CONCLUSION..............................................................................................................................12REFERENCES..............................................................................................................................132
Index of TablesTable 1: Variance calculation of May............................................................................................10Table 2: Reconciled operating statement of May..........................................................................11Table 3: Variance at 10% reduction in demand.............................................................................113
INTRODUCTIONManagement accounting is the most important field of study which assists organizationto minimize cost and maximise profitability. It is helpful for corporation in determining aim ofthe business and support accounting personnel to preparing long term investment plan. Presentreport is based on different case scenario such as Bittern Ltd, Antoonio ltd and Toscanini Ltd.These corporation deals in several types of products and services and cost structure of the samehas been referred in report. Furthermore, current report covers classification of cost by usingdifferent costing methods. Routine cost analysis has also been prepared which serves as path fortaking corrective action when required. Apart from this, budgeting process and variancesanalysis are explained.TASK 11.1 Preparing report and classifying different types of costClassification of cost is imperative task which is based on requirement of every business.These different costing methods are explained as follows-By natureThe cost classification on the basis of nature is based on elements like material, labourand expenses. The examples of material cost are taxes & duties, freight and insurance as well asrebates (Bellah and et. al., 2013). On the other hand, labour cost is directly associated withproduction activities which consists of salaries & wages and fringe benefits like gratuity, bonusand incentives. Other expenses such as job processing charges are also included in costclassification by nature.By functionsAccording to the functions cost are classified under different aspects like production,selling, administration as well as distribution. Along with that research & development andadministration. Furthermore, production cost can be direct and indirect that consists of allexpenses such as quality control, labour welfare expenses and salaries for staff (Chapman,Hopwood and Shields, 2011). Furthermore, administration cost consists of legal, bank charges aswell as salaries of accountant staff. Similarly, example of selling cost are; royalty on sales, legal4
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